Chinese Depositors Protest Lead To Hundreds of Arrests

A month after hundreds of depositors protested over their lost savings in one of the largest demonstrations the country has seen in one of the largest demonstrations the country has seen since the pandemic began, police in China have arrested 234 suspects who are allegedly involved in a rural banking scandal.
Since April, four rural banks in the central province of Henan in China have frozen accounts totaling millions of dollars. This has caused untold suffering for hundreds of thousands of clients in an economy that was already suffering from the implementation of stringent Covid lockdowns.
In a statement released on Monday, the police in Xuchang city, Henan, said that “substantial progress” had been achieved in the process of recovering losses, and that the investigation into the matter was moving forward.

It was reported that a criminal organization led by the suspected mastermind, Lv Yi, gained control of four rural banks, one of which being the Yuzhou Xinminsheng Village Bank, and lured depositors with promises of yearly returns as high as 18%.

In the past two months, distressed depositors have held a number of demonstrations in the city of Zhengzhou, which serves as the capital of the province of Henan. However, their pleas for the return of their savings have been ignored by the relevant authorities.

Depositors from all around China launched their greatest demonstration to yet in July, when they joined together in front of the Zhengzhou branch of the People’s Bank of China. There were over a thousand people in attendance. A harsh crackdown was carried out by the authorities on the otherwise peaceful march, which resulted in the demonstrators being forcibly dispersed by police and other security officers dressed in plain clothes.
After the demonstration, Henan’s financial regulator announced that depositors would be refunded, with the first payments being made to bank customers who had deposited a combined total of less than 50,000 yuan ($7,200) at a single bank. The protest was in response to the fact that the bank had failed to pay interest on deposits made by customers.

The announcement that the financial authorities will begin another round of repayments to clients was made on Monday. This new round of repayments will focus on customers who have deposits between 400,000 and 500,000 yuan ($57,800 and $72,200), respectively.
According to the authorities, depositors who have lost a greater amount would each get an initial sum of 500,000 yuan, with the remaining being held back for the time being.
According to the statement, “after this round of repayments, the centralized payback process will be essentially completed,” and from that point on, any additional concerns will be handled by the four rural banks.

In recent years, there has been an increase in the number of bank runs on smaller Chinese banks, and some of those banks have been accused of financial misdeeds or corruption. However, financial analysts are concerned that a much more severe issue may be on the horizon, which may be the result of the aftermath from a real estate catastrophe as well as the rising amount of bad debts that are tied to the Covid-19 pandemic.
Around 4,000 small lenders in China control around one quarter of the total assets held by the country’s banking system. These small lenders frequently have unclear ownership and governance structures, making them more susceptible to corruption as well as the severe economic recession.

Read More Economic News Here

Advertisement